This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

In 2007, Tullow Oil plc (“Tullow”) and its partners discovered the Jubilee oil field offshore of Ghana. The project involves the first phase of development of the Jubilee field. It involves the drilling of 17 wells (nine production wells, five water injection wells, and three gas injection wells), sub-sea production installations and leasing of a floating production, storage and offloading (“FPSO”) vessel for processing, storage and handling of crude. Initial estimated gross production capacity is 120,000 barrels of oil per day and will increase as the field is further developed and more reserves are proven.

Project sponsor and major shareholders of project company

Tullow is an independent oil and gas exploration and production company listed on the London and Dublin Stock Exchanges and is largely owned by institutional investors, with no single institution holding a stake greater than 12%. Tullow is an Africa focused company with a large majority of its production as well as reserves in Africa. Its other operations include producing assets in the United Kingdom (North Sea), Bangladesh, and Pakistan. The Project will develop the first phase of the world class Jubilee discovery and is expected to help double Tullow’s current production.

Total project cost and amount and nature of IFC's investment

The total cost of the Project is estimated at approximately $3.2 billion with Tullow’s share of costs estimated at $1.2 billion, with the remaining balance to be covered by the other partners in the project.

IFC proposes to provide a corporate debt facility of up to $115 million in parallel with a corporate debt facility provided by commercial banks. Tullow plans to secure additional funding through portfolio rationalization and/or from other corporate sources.

IFC investment as approved by Board

115 million (USD)

Product Line

IFC Investment (million USD)

Risk Management

Guarantee

Loan

115

Equity

* These investment figures are indicative

Location of project and description of site

The Jubilee Field is located in the West Cape Three Points Block and the Deepwater Tano Contract Area. The field is approximately 63 km from the nearest Ghanaian coastline. The field is 75 km south-southeast of the Cote D’Ivoire (Ivory Coast) and Ghana border and is 132 km southwest of the Ghanaian port city of Takoradi. Water depth ranges from 1,000m to 1,700m within the field. Reservoir objectives in the field range in depth from 3,150m to 3,755m.

- raise private sector competitiveness; - improve human development outcomes with interventions in health, education, water and sanitation, and social protection sectors; and - strengthen governance through decentralization, public sector reform, and promotion of results-based public policy choice.

To help with its strategy, the World Bank Group’s program in Ghana has set three overarching objectives: increasing economic growth, reducing poverty and reducing inequalities. The goal of increasing economic growth rests primarily on the expansion of the private sector, its competitiveness and its diversification. To support this economic growth objective, IFC’s strategy in Ghana has focused on supporting private provision of infrastructure, deepening the domestic financial sector, expanding opportunities for micro, small and medium scale enterprise borrowing through local financial institutions, promoting the development of non-traditional exports and enhancing the business environment.

IFC’s support of the project is consistent with this strategy: It promotes the development of a private sector-led industry that can generate exports and/or replace expensive imports of crude by local refineries and opens up avenues for additional downstream investments by using gas that can provide energy to sustain economic growth. It will provide Government with the resources needed to pursue its poverty reduction strategy.

Development Impact:
The development of the Jubilee oil field is expected to generate substantial benefits for the country:

- Develop domestic sources of energy: The project would help develop local sources of energy which opens up options for the Government to address critical issues such as dependence on foreign crude imports and foreign exchange generation. The project also raises the possibility of gas production, which can provide substantial opportunities at addressing the shortage of power in the country.

- Expand exports/reduce imports: The project would help add to Ghana’s exports and generate substantial foreign exchange earnings through export of crude. Alternatively, local oil production will allow Ghana to replace crude oil imports, thereby conserving foreign exchange for the country.

- Attract foreign direct investment: Although oil exploration has been taking place in Ghana since its independence in 1957, few oil companies have shown interest in the country. The size of the Jubilee field and its successful development should spur significant interest from major oil companies and energize Ghana’s hydrocarbon sector by increasing exploration and development activities in the country. This interest should result in expanding foreign direct investment in Ghana, which has remained relatively low for an economy of its potential.

- Generate revenues for Government: It is expected that the Government of Ghana will receive substantial fiscal receipts from royalties, production sharing and corporate taxes, generated by oil production from the project.

- Create direct employment: Production operations and onshore support will bring employment opportunities. Approximately 156 employment opportunities with between 10% to 50% local staffing content are expected. In addition, marine and aviation support operations will continue to provide approximately 60 employment opportunities with a local staff complement of between 30% and 80%. Such employment would also bring a new set of skills and technology into the country and would expand the employment opportunities of local participants both regionally and globally.

- Stimulate demand for local goods and services: Under the Petroleum Agreement signed with the Government, Tullow and its partners shall give preference to materials, services and products produced in Ghana. The focus on locally produced goods and services will encourage economic activity in other areas such as construction, rentals, fabrication and business services.

The key development indicators that are proposed to be monitored during the life of the IFC investment are:
- annual oil production;
- direct employment levels;
- production sharing and fiscal payments accruing to the Governments; and
- annual expenditures on domestic goods and services.

Governance risks assessment

A part of the Project's expected benefits are in the form of royalties, share of production and tax payments to Government. In coming to a view of whether to support this project, IFC considered the value of the project’s benefits and the governance and other risks to these benefits. In doing so, IFC has reviewed a variety of governance assessments on Ghana, including the World Bank Institute’s Governance Indicators, as well as Transparency International’s Corruption Perceptions Index (CPI). The WBI indicators show that Ghana is well above the regional average while the latest CPI ranks Ghana ahead of some middle-income countries. These indicators show that Ghana is performing reasonably well on governance and that the governance foundations for Ghana’s development are good. Donors agree that the Government has significantly improved the management of public resources in recent years. Although political constraints have tended to slow implementation of reforms and controls, progress is definitely being made. Furthermore, the Government has made governance a key component of the Government’s poverty reduction strategy and has taken tangible steps in making progress on this aspect, such as being the first to go through the African Peer Review Mechanism. In addition, the Company has agreed to disclose publicly its payments to governments at the national level. On balance, therefore, it is deemed that, although the Government still needs to step up its performance, the governance risks to the benefits from the Project are acceptable.

IFC's expected development contribution

IFC’s key contributions include:

- Environmental and Social Risk Mitigation: Tullow will apply IFC’s Performance Standards on Social and Environmental Sustainability. The company is keen to benefit from IFC’s expertise, particularly with respect to establishing an integrated Environmental and Social Management System which would ensure uniform implementation of and compliance with IFC requirements. The company also plans to draw on IFC’s experience in identifying areas for the further development and improvement of the management of environmental and social aspects of its operations. This should be of considerable benefit to the company when it draws up plans to develop further the Jubilee field or other assets in its portfolio.

- Funding Mobilization: IFC’s participation in the financing package will give commercial banks the comfort to provide financing to a large project in Africa in an untested and evolving sector in Ghana, particularly at this time of uncertainty and volatility in credit markets. With this Project and Tullow’s overall growth strategy, the company will be requiring substantial amounts of financing. Over the coming years, IFC can assist in mobilizing the needed financing, particularly during unfavorable market conditions.

- Enhancement of Local Benefits: IFC and Tullow are collaborating at enhancing employment/income generation opportunities for local communities. IFC will work with the company and its partners to develop entrepreneurship and linkages programs, drawing from IFC’s experience, both local and global, in successfully formulating and implementing such types of programs.

Environmental and social issues - Category B

This is a Category B project according to IFC’s Environmental and Social Review Procedures. Because a substantial part of the facility that IFC will be helping to finance will go toward the development of the Ghana Jubilee Field Phase 1, the project categorization was based on the review of this development, for which a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The key issues identified during appraisal of the Project, and described in detail in this Environmental and Social Review Summary, were:

- Establishing an Integrated Environmental, Health, Safety and Social Management System (“EHSS MS”), particularly in managing change in the Project beyond Phase 1;
- Occupational health and safety management, including job hazard analyses, fire and explosion prevention and control;
- Emergency response and community safety, including oil spill preparedness and response, well blowout prevention;
- Sustainable management of production waste and drilling fluids and cuttings during development; and
- Impacts on the marine biota, with specific attention to endangered species potentially present in the Project area.

The Project will be located in deep water (1000 to 1700m), approximately 60 km from the nearest point on the coast with Ghana. The location of the Project will mean that impacts from production waste will be limited, and any health and safety issues can be readily handled using well-known procedures and engineering technology. Since mitigation measures for the identified impacts can be readily defined, adverse impacts are not expected to be diverse or irreversible, and they will be limited to the Project area.

Tullow will apply IFC's Performance Standards in the assessment and management of their social and environmental risks, including local community and other stakeholder engagement as appropriate to the projects risks and impacts for projects financed by the proposed IFC loans.